SALT Deductions and Entity-Level Elections
In the transportation world, it’s not uncommon for companies to file in income and franchise tax returns in multiple states depending upon where they are located, where they have employees, and where they are driving. For some companies, it can mean filing returns in 30+ states/jurisdictions. With a $10,000 state and local tax (SALT) limitation on individuals itemizing on their individual return, pass-through entities have an opportunity to save some tax by making an entity-level election.
In general, by making an entity-level election, the taxes are being imposed and deducted at the passthrough entity level, which reduces the taxable income that flows to individual owners of passthrough entities. This allows the owner of the passthrough entity to deduct the tax they may otherwise not be entitled to.
Here’s a link to an article I wrote that discusses a few ways to help lower your tax bill making making an entity-level election.
Andy is a CPA and trusted advisor with 15 years of experience providing tax, accounting, assurance, and consulting services to transportation industry owners and operators. He is a tax principal with CLA in the Minneapolis, MN office. He also consults with high net worth individuals and owners of closely-held transportation businesses on all aspects of tax planning, estate planning, and retirement planning. Andy is also the tax leader for transportation industry across CLA.
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